De novo mutations in ADNP, which encodes activity-dependent neuroprotective protein (ADNP), have recently been found to underlie Helsmoortel-Van der Aa syndrome, a complex neurological developmental disorder that also affects several other organ functions 1 . ADNP is a putative transcription factor that is essential for embryonic development 2 . However, its precise roles in transcriptional regulation and development are not understood. Here we show that ADNP interacts with the chromatin remodeller CHD4 and the chromatin architectural protein HP1 to form a stable complex, which we refer to as ChAHP. Besides mediating complex assembly, ADNP recognizes DNA motifs that specify binding of ChAHP to euchromatin. Genetic ablation of ChAHP components in mouse embryonic stem cells results in spontaneous differentiation concomitant with premature activation of lineage-specific genes and in a failure to differentiate towards the neuronal lineage. Molecularly, ChAHP-mediated repression is fundamentally different from canonical HP1-mediated silencing: HP1 proteins, in conjunction with histone H3 lysine 9 trimethylation (H3K9me3), are thought to assemble broad heterochromatin domains that are refractory to transcription. ChAHP-mediated repression, however, acts in a locally restricted manner by establishing inaccessible chromatin around its DNA-binding sites and does not depend on H3K9me3-modified nucleosomes. Together, our results reveal that ADNP, via the recruitment of HP1 and CHD4, regulates the expression of genes that are crucial for maintaining distinct cellular states and assures accurate cell fate decisions upon external cues. Such a general role of ChAHP in governing cell fate plasticity may explain why ADNP mutations affect several organs and body functions and contribute to cancer progression1,3,4. Notably, we found that the integrity of the ChAHP complex is disrupted by nonsense mutations identified in patients with Helsmoortel-Van der Aa syndrome, and this could be rescued by aminoglycosides that suppress translation termination 5 . Therefore, patients might benefit from therapeutic agents that are being developed to promote ribosomal read-through of premature stop codons6,7.